this situation directly affects my husband and me, too. i wonder what it'll be like in three or four years, when we hope to buy a house. will a 20k or 30k down payment be enough anymore? or will we now have to wait 10-15 years to actually buy a house in cash?
now i'm not a huge economics buff or very knowledgeable about the cash/credit system or relationship, but what does this mean? if we revert to a cash-only payment society, do you think costs of goods and services will ultimately go down? will it force a free market back upon us? sorry if this is making me sound really dumb, but i honestly don't know much about that kind of thing and i'm hoping to get some more information/opinions.
A cash-only society would severely constrain the economy. Businesses couldn't borrow to buy equipment or expand so they'd have to wait until they saved up enough money to purchase things outright.
Similarly consumers couldn't walk into Best Buy and use a credit card to buy something. They'd have to save up and pay for it in full.
Our current consumer-driven economy would essentially collapse and we'd revert back to a 19th century style "cottage" industry economy. Without available credit businesses would be limited to what they could build and sell for cash and far fewer transactions would take place because people would expect payment in full at the time of purchase.
that's what i figured. so would it be something like a crash, where people are relying on credit and now all of a sudden have to pay in cash--so things would be stagnant for a good while until people could save up enough to purchase things, etc?
trust me, i hear you on the 80% down thing. not sure if you read in my journal that my mom was going to buy a house as an investment and ryan and i would rent it from her. she had about 100k to put down, on a 200-215k house. even with that--about a 50% down payment--we figured that with property taxes, insurance, and the mortgage, it would be 1200-1400 a month! needless to say, we held off. looking at it now, it may never happen.
the free market has proven to be effective. why so much government control?!?! don't people LEARN??? (sadly, they don't.)
Unfortunately we get a "little" government control to "protect people" and then when that leads to the inevitable waste, fraud and abuse we get even more control to (again!) "protect people" until we get to the point where no one feels responsible for their own actions any more.
I'm quite outraged by this and I can only hope that the McCain/Palin ticket will stand up against this kind of garbage.
The entire boards of Fannie Mae/Freddie Mac should be sent to jail for the rest of their lives. That would be change America could believe in. It's time for these thieves in Washington and Wall Street to pay with their lives for the crimes they've asked the American people to foot the bill for.
I'm practically apoplectic.
Though I know he doesn't get a lot of credence, Savage has been railing against this for months and he's been right on the money. Not a word from Democrats. Not a peep. Yet, there are too many 'Republicans' who are far too silent on this too. This is criminal.
As you said to ellie_kay, prepare for the 'cash-only' society and the '80% down-payment' for houses.
my husband and i were looking into buying a house recently. we were approved for an FHA loan, but we didn't have the down payment that they require. even though the FHA loans require a small down payment, there is no assistance out there any more. also, the houses in florida are still stupidly expensive. we were looking at a 1700 square foot home, built in 1960, with a tiny backyard that was up for sale at $201k. They only recently have been bringing it down, so now it's at $175k. still over what we think the home is worth. also, the taxes for the home are around $3k a year and the insurance is about $1800 a year. so, in reality, it's not even worth buying a house anymore. especially down here.
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now i'm not a huge economics buff or very knowledgeable about the cash/credit system or relationship, but what does this mean? if we revert to a cash-only payment society, do you think costs of goods and services will ultimately go down? will it force a free market back upon us? sorry if this is making me sound really dumb, but i honestly don't know much about that kind of thing and i'm hoping to get some more information/opinions.
Reply
A cash-only society would severely constrain the economy. Businesses couldn't borrow to buy equipment or expand so they'd have to wait until they saved up enough money to purchase things outright.
Similarly consumers couldn't walk into Best Buy and use a credit card to buy something. They'd have to save up and pay for it in full.
Our current consumer-driven economy would essentially collapse and we'd revert back to a 19th century style "cottage" industry economy. Without available credit businesses would be limited to what they could build and sell for cash and far fewer transactions would take place because people would expect payment in full at the time of purchase.
Reply
trust me, i hear you on the 80% down thing. not sure if you read in my journal that my mom was going to buy a house as an investment and ryan and i would rent it from her. she had about 100k to put down, on a 200-215k house. even with that--about a 50% down payment--we figured that with property taxes, insurance, and the mortgage, it would be 1200-1400 a month! needless to say, we held off. looking at it now, it may never happen.
the free market has proven to be effective. why so much government control?!?! don't people LEARN??? (sadly, they don't.)
Reply
Unfortunately we get a "little" government control to "protect people" and then when that leads to the inevitable waste, fraud and abuse we get even more control to (again!) "protect people" until we get to the point where no one feels responsible for their own actions any more.
Reply
Gee, thanks, Congress. You just made a bad situation exponentially worse!
It's time to scrap the incumbents, and start over from scratch.
Reply
The entire boards of Fannie Mae/Freddie Mac should be sent to jail for the rest of their lives. That would be change America could believe in. It's time for these thieves in Washington and Wall Street to pay with their lives for the crimes they've asked the American people to foot the bill for.
I'm practically apoplectic.
Though I know he doesn't get a lot of credence, Savage has been railing against this for months and he's been right on the money. Not a word from Democrats. Not a peep. Yet, there are too many 'Republicans' who are far too silent on this too. This is criminal.
As you said to ellie_kay, prepare for the 'cash-only' society and the '80% down-payment' for houses.
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